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Directors Report of Agro Tech Foods Ltd.

Mar 31, 2016

The Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended 31st March, 2016.

1. PERFORMANCE OF THE COMPANY

1.1 Results

Your Company''s performance for the year ended 31st March, 2016 is as follows:

(Rs, Millions)

2015-16 2014-15 Net Sales 7,801.94 7,562.34

Other Income 20.16 36.41

Total Income 7,822.10 7,598.75

Operating Expenses 7,252.80 6,985.89

PBDIT 569.30 612.86

Depreciation 160.12 147.58

Interest 53.28 12.29

Profit Before Tax (PBT) 355.90 452.99

Taxes 122.31 80.20

Profit After Tax (PAT) 233.59 372.79

Net Sales for the year at 7,801.94 MM were 3% higher than Prior Year reflecting continued strong growth in the Foods business which registered an increase in Net Sales of 8% to reach a turnover of Rs 1,713 MM. In the Edible Oils business, Net Sales increased by 2% with a 5% increase in turnover of Sundrop Oils offset by an 8% decline in the commodity Crystal business. Depreciation increased by 8% reflecting the absorption of a significant Capex program with Interest costs rising due to higher imports of popcorn kernels to ensure input supply continuity. Effective Tax rate for FY''16 at 34% was higher than previous year (PY) of 18% reflecting the end of Section 80IC benefits at the Kashipur facility.

1.2 Key Indicators

(Rs, Millions)

2015-16 2014-15

Gross Margin (GM) 1,826.48 1,897.64

GM % 23.4% 25.1%

Advertising & Sales Promotion 426.50 443.89

A&P % 5.5% 5.9%

Gross Margin % was lower than PY by 170 basis points reflecting 3 key investments made by the Company to drive Growth – (a) Absorption of higher Manufacturing Costs as a consequence of a significant Capex program over the period FY''14 to FY''16 (b) Distributor support investments for higher delivery costs incurred for an additional 200 Company Salesmen (c) Improvement in value proposition despite higher corn costs for continued volume growth in the Snacks category. A&P spend was lower by 40 basis points reflecting the choice made by the Company to increase investments in Distribution through higher Company Salesmen and Distributor Support mechanisms translating into an additional 100 basis points of investment in Distribution.

2. DIVIDEND

Given the continued strong performance of the Company, your Directors are pleased to recommend a Dividend of Rs, 2/- per equity share of the face value of Rs, 10/- each for the period ended 31st March, 2016 subject to the approval of the share holders at the Annual General Meeting to be held on 27th July, 2016.

(Rs, Millions)

2015-16 2014-15

Profit after Tax 233.59 372.79 Profit brought forward from 2,041.97 1,727.84 Previous year

Surplus available for 2,275.56 2,100.63

Appropriation

Transfer to General Reserve - -

Proposed Dividend for the Financial year at the rate of Rs, 2/- each* (previous year Rs, 2/-) - 48.74

Tax on Proposed Dividend - 9.92

Forward to the following year 2,275.56 2,041.97

*Refer Note No. 2.46 in notes to accounts

3. RESPONSIBILITY STATEMENT The Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

4. CORPORATE GOVERNANCE

In terms of the Listing Agreement, a report on Corporate Governance along with Auditors'' Report on its compliance is annexed, forming part of the Annual Report.

Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by SEBI (Listing Obligations and Disclosure Requirements) 2015.

In line with the requirements of new Companies Act, 2013, your Company has constituted new Board Committees and has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.

5. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)

Based on feedback from members on the Annual Report and Accounts, this report includes MD&A as appropriate so that duplication and overlap between the Directors'' Report and a separate MD&A is avoided and the entire material is provided in a composite and comprehensive document.

6. INDUSTRY STRUCTURE & DEVELOPMENTS

The Food industry continued to remain sluggish during FY''16. However, your Company has taken significant measures to ensure continued strong growth through a combination of investments in manufacturing capacities and increased investments in distribution expansion.

We expect to be able to continue to deliver strong growth and take advantage of the significant capital investments we have recently completed behind products with clear competitive advantage and "right to win". An improvement in the overall consumption climate will enable us to further accelerate this growth.

7. OPPORTUNITIES AND THREATS

The Indian food industry is still at a nascent stage and we expect it to record solid growth rates for several years to come. This represents a significant opportunity for your Company given that we have already made balanced capital investments to develop a portfolio capable of delivering steady profitable growth.

The continuing digitization of today''s world presents both an opportunity and a threat. An opportunity because it enables us to communicate with and deliver to consumers in a far more focused manner than was possible in the pre-digital age. However, it is also a threat because it enables smaller competitors to reach out to consumers in a manner not possible in the pre-digital age because of the high costs of legacy distribution systems. We have to approach this in a nimble and balanced manner and are confident that in doing so we will be able capture the opportunities while overcoming the threats.

8. STATE OF THE COMPANY''S AFFAIRS

In FY''16 Act II remained the fastest growing Snacks brand in the Modern Trade and Sundrop Peanut Butter the fastest growing Spread in the Spreads Category, enabling us to deliver strong growth in the Foods business of the Company.

Our strong and profitable position in both the Snacks and the Spreads categories means that we are well placed to seize growth opportunities in both of these categories with a portfolio which is profitable and meets emerging consumer needs.

In the last year''s Director''s Report we had stated our intent to increase investments in Distribution with the establishment of a strong portfolio. In FY''16 your Company increased its investment in Distribution Expansion by c Rs.80 MM or 100 basis points of Net Sales which was largely funded by savings in administrative expenses. This investment was made with a steady build up during the year translating into an accelerated quarter on quarter growth in our Foods business in FY''16.

Your Company will continue to leverage the investments made both in portfolio expansion & distribution expansion to drive growth in both the Snacks & the Spreads categories while maintaining a strong position in the Edible Oils category.

This will enable us to progress towards our goal of being amongst India''s "Best Performing Most Respected Foods Companies".

9. PRODUCT CATEGORIES

9.1 Snacks:

Your Company continued to gain share in the Rs,10,000 crore Snacks category in India driven by further relevant extensions of the Act II brand and selective extension into Indian snacks of the Sundrop brand. Act II, which is now present in Ready to Cook Popcorn, Tortilla Chips, Ready to Eat Popcorn and Extruded Snacks recorded a turnover of Rs,148 crore in Net Sales in FY''16. In the Modern Trade, Act II was the fastest growing Snack in FY''16 with a value share of roughly 9% of the Category as compared to an estimated 2% share across all channels. As we expand our distribution and manufacturing footprint we would expect to realize our fair share of the category nationally.

Success in the Snacks business requires both an expansion in distribution and a national manufacturing footprint. As stated earlier in this report we have significantly increased our investments in Distribution in FY''16. Last year, your Company also acquired land in both Chittoor (AP) and Kolkata (WB). Regulatory approval has already been received for Chittoor where we are in the process of commencing construction. In the case of Kolkatta we will await the necessary regulatory clearances. Together with the 4 existing plants and the near completion of plant close to Guwahati will enable us to be a profitable and strong national Snacks player.

9.2 Spreads:

The Rs,1000 crore Spreads category was one of the fastest growing food categories nationally in India in FY''16. With a 30% growth in Volume & Value in FY''16, we estimate that Sundrop Peanut Butter now has roughly 3% of the category nationally and about 7% in the Modern Trade where it is clearly the driver of category growth.

Your Company continues to make steady investments behind the Peanut Butter business and we feel is well positioned to seize the growth opportunities and capture our fair share of the Category. In FY''16 the Company introduced small pack sizes to drive trial of the Category while continuing to drive distribution. In FY''17 we will continue to use innovation to drive the Spreads category and our share within the Category.

9.3 Edible Oils & Sprays:

With a 76% share of total revenue, the Edible Oils category continues to be a critical category for your Company. In FY''16 we recorded a steady performance on Sundrop Edible Oils which recorded a volume growth of 6% and a value growth of 5%. The commodity Crystal Oil which is sold largely in the states of Andhra Pradesh and Telangana however came under significant competitive pressure and recorded a decline of 14% in volume and 8% in value. Your Company continues to support our flagship Sundrop Heart in this Category with adequate level of investments to ensure that our position in this category remains healthy and profitable while delivering the highest returns to our shareholders.

9.4 Soups, Puddings & Desserts:

As stated in last year''s report your Company is in the process of evaluating the impact of local production capabilities in this category. This will be undertaken along with alternate options for investment choices, a process which is currently underway.

9.5 Meals & Meal Enhancers:

As stated in last year''s report your Company is in the process of assessing the impact of local production on this category. Similar to 9.4 (above) this will be undertaken along with alternate options for investment choices, a process which is currently underway.

10. RESEARCH, QUALITY & INNOVATION (RQI)

Your Company continues to focus on innovation as a driver of growth. In FY''16 innovation drove the rapid growth that we saw in both the Spreads and the Bagged Snacks categories. This process will continue in FY''17 in addition to which we will also bring our innovation capabilities to test new categories.

11. CONSERVATION OF ENERGY, ABSORPTION, TECHNOLOGY, FOREIGN EXCHANGE AND EMPLOYEE PARTICULARS

A Statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as annexure and forms part of this report.

12. HUMAN RESOURCES / INDUSTRIAL RELATIONS

As a part of a Company wide program to reduce the cost of Purchased Services while leveraging the digital world, we have discontinued the use of several external measurement systems including the use of retail audits. In the area of Human Resources we discontinued the use of external measurement of engagement and used available internal digital tools. Our engagement scores continue to be robust with an engagement level of 79%.

Your Company will continue to work to ensure that we have a highly engaged and productive organization to deliver against our vision of being amongst India''s "Best Performing, Most Respected Foods Companies".

13. PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 thereunder in respect of the employees who were in receipt of remuneration aggregating Rs, 60 lakhs or more or were employed for part of the year and were and in receipt of remuneration aggregating Rs, 5 lakhs per month or more during the financial year ending 31st March, 2016 is provided in the Annexure forming part of this Report.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

15. PARTICULARS OF CONTRACTS WITH RELATED PARTIES

All contracts or arrangements or transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract or arrangement or transaction with related parties which could be considered material i.e., transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, in accordance with the policy of the Company on materiality of related party transactions, Companies Act, 2013 and Listing Regulations.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website.:http://www.atfoods.com/ templates/home_tpl/pdf/other_info/ policy_dealing_related_party_transactions.pdf

The related party disclosures form part of the financial statements provided in this Annual Report.

16. EMPLOYEE STOCK OPTION PLAN

The Company, vide special resolution in the Annual General Meeting of the Company held on 25th July 2012 had approved "Agro Tech Employee Stock Option Plan" ("Plan"). The Plan was further modified vide special resolution in the Annual General Meeting held on 24th July 2015 to align it with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SEBI Regulations") and other applicable provisions for the time being in force. The Plan is administered by Agro Tech ESOP Trust ("Trust") under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company ("Committee"). The Plan is in compliance with the provisions of SEBI Regulations and there has been no material change in the Plan during the year. Further details of the Plan are available on the website of the Company at www.atfoods.com.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As a good corporate citizen responsible for the communities where we operate, your Company is involved in a CSR activity under the umbrella of Poshan. The program which is designed to address malnourishment amongst children, works with Government Anganwadi''s and Child Malnourishment Treatment Centers using Peanut Butter which is a source of protein and highly effective to fight malnutrition. In FY''16 we increased the coverage of the program to 10,700 children up from 8,000 children in the prior year. However, spending was lower at 1% due to higher efficiencies in the process and further expansion of the program awaiting necessary governmental approvals. On receipt of the approvals, we will be in a position to further expand this program and work towards the 2% guideline specified in the Companies Act, 2013.

As per the Companies Act, 2013, all Companies having net worth of Rs, 500 crore or more, or turnover of Rs,1,000 crore or more or a net profit of Rs, 5 crore or more during any financial year will be required to constitute a CSR Committee of the Board of Directors comprising three or more directors, at least one of whom will be an Independent Director.

Aligning with the guidelines, the Company has constituted a CSR Committee comprising Lt. Gen. D B Singh as Chairman, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani, Ms. Anna Biehn, Mr. Michael Walter and Mr. Javier Eduardo Alarcon Ruiz as its Members. The Committee is responsible for formulating and monitoring the CSR Policy of the Company. The CSR Policy of the Company, as approved by the Board of Directors is available on the Company''s website:http:/ /www.atfoods.com/templates/home_tpl/pdf/ other_info/ATFL%20CSR%20POLICY.pdf. The program Poshan also received the 2014 South Asia Platinum SABRE Award for Corporate Social Responsibility.

18. RISK MANAGEMENT POLICY

The Company has formulated and adopted risk assessment and minimization framework which has been adopted by the Board at the Board Meeting held on 1st May 2006. The Company has framed a risk management policy and testing in accordance with the laid down policy is being carried out periodically. The Senior Management has been having regular Meetings for reassessing the risk environment and necessary steps are being taken to effectively mitigate the identified risks. A Risk Management Committee also has been constituted with a Committee of the Directors and senior management to address issues which may threaten the existence of the Company

19. WHISTLE BLOWER POLICY (VIGIL MECHANISM)

The vigil mechanism under Whistle Blower Policy has been approved by the Board of Directors on 17th October, 2014. This Whistle Blower Policy of the Company provides opportunities to employees to access in good faith, to the Management, concerns (in certain cases to the Audit Committee) in case they observe unethical or improper practices (not necessarily a violation of law) in the Company and to secure those employees from unfair termination and unfair prejudicial employment practices. The policy has also been uploaded on the website of the Company:http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ATFL_WB% 20 Policy % 20 final.pdf

20. INFORMATION SYSTEMS

Your Company continues to focus on the use of technology and automation to drive productivity to work efficiently with our customers & suppliers while making available to our employees robust information to ensure best in class analysis of the business and identification of opportunities to improve shareholder return.

21. FINANCE AND ACCOUNTS

21.1 Internal Controls

The Company has a robust system of internal controls commensurate with the size and nature of its operations, to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, prevention, and detection of fraud and error, accuracy and completeness of accounting records, timely preparation of reliable financial information and adherence to the company''s policies, procedures and statutory obligations.

Your Company has established standard operating procedures for smooth and efficient operations in addition to ensuring internal controls. Your Company has also documented:

a comprehensive Code of Conduct for the Board Members and employees of your Company

- An Employee Handbook

- Whistle Blower Policy defined to provide channel of communication without fear Comprehensive framework for Risk Management, and

CEO/CFO Certification for Financial Reporting Controls to the Board

The Company has appointed Internal Auditors to ensure adequacy of internal control systems and make recommendations thereto. Audit reports are circulated to management, which takes prompt action as necessary.

The Audit Committee of the Board meets periodically to review the performance as reported by Auditors. The Internal and External Auditors also attend the meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee also issues directives and/or recommendations for enhancement in scope and coverage of specific areas, wherever felt necessary.

21.2. Cautionary Statement

Statements in this Directors'' Report and Management Discussion and Analysis describing the company''s objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

21.3 Outlook

We believe that your Company now has the combination of a strong product portfolio and a proven business model for distribution expansion leveraging this broader portfolio. We will continue to invest in a balanced manner behind both our brands and expansion of distribution to achieve steady profitable growth.

22. DIRECTORS

In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Ms. Anna Elizabeth Biehn retires by rotation and being eligible, offers herself for re- appointment. A brief profile of Ms. Anna Biehn is given in the notice of the 29th Annual General Meeting.

Mr. Michael Walter has tendered his resignation as a Director of the Company. The Directors place on record their appreciation of the valuable services rendered and wise counsel given by Mr. Michael Walter during his tenure of office as Director.

Dr. Pradip Ghosh Chaudhuri, the Whole-time Director retires from the Company with effect from 30th June, 2016. Mr. Sachin Gopal has been appointed as the Additional and Managing Director with effect from 1st July, 2016 subject to approval of the shareholders and Central Government as may be applicable.

Mr. Steven Harrison is being appointed as an Additional Director of the Company pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and Article 130 of the Articles of Association of the Company.

They hold office up to the date of the ensuing Annual General Meeting. Notice together with the deposit, as required under Section 160 of the Companies Act, 2013 has been received from a Member proposing the appointment of Mr. Steven Harrison and Mr. Sachin Gopal as Directors of the Company at the Annual General Meeting.

A brief profile of the above Directors is given in the notice of the 29th Annual General Meeting.

All the Independent Directors of the Company have also given a confirmation to the Company as provided under Section 149(6) of the Companies Act, 2013 that:

a. they are persons of integrity and possess relevant expertise and experience;

b. i. they were neither are a promoter of the

Company or its holding, subsidiary or associate Company;

ii. they are not related to promoters or other Directors in the Company, its holding, subsidiary or associate Company;

c. they do not have any pecuniary relationship with the Company, its holding, subsidiary or associate Company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;

d. none of their relatives has or had pecuniary relationship or transaction with the Company, its holding, subsidiary or associate Company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

e. neither they nor their relatives –

(i) hold or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed;

(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed, of—

(A) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or

(B) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten per cent or more of the gross turnover of such firm;

(iii) held together with any relatives two per cent or more of the total voting power of the Company; or

(iv) is a Chief Executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two per

cent or more of the total voting power of the Company;

f. they possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company''s business.

None of the independent Directors will retire at the ensuring Annual General Meeting.

23. MEETINGS OF THE BOARD

The Board of Directors met 4 times during the period April to March in the year 2015-16 on the following dates:

1. 17th April, 2015

2. 24th July, 2015

3. 16th October, 2015

4. 21st January, 2016

24. AUDIT COMMITTEE

The Company''s Audit Committee presently comprises of six Directors, all except one are non- executive and Independent Directors. This is in compliance with Clause 49 of the Listing Agreement. Lt. Gen. D.B. Singh, an Independent Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni, Mr Narendra Ambwani, Mr. Arun Bewoor Mr. Javier Eduardo Alarcon Ruiz and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section 177 of the Companies Act, 2013 and the relevant clauses of the Listing Agreement.

25. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The performance of the Company''s Key Managerial Personnel, Whole time Director and Employees is measured on the progress being made on the strategic vision of the Company and Profitability. Progress against the strategic vision of the Company is measured by continued improvement in Gross Margin and share of the Foods business in the total Net Sales of the Company. Profitability is measured using Profit After Tax as a single measure.

The details as required under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being provided as an Annexure to this Report.

26. EVALUATION OF THE BOARD

The Company has formulated a Remuneration Policy in line with the requirements of the Companies Act, 2013. The performance evaluation of Independent Directors is done by the entire Board of Directors (excluding the director being evaluated). On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the Independent Directors.

The Board is evaluated on the basis of the following attributes namely, guiding strategy, nurturing leaders, aligning incentives, managing risks, enhancing the brand and enabling governance.

The remuneration / commission to Non-Executive and Independent Directors shall be fixed as per the provisions contained under Companies Act, 2013. The Non- Executive / Independent Directors may receive remuneration by way of fees for attending each meeting of Board or Committee thereof. Provided that the amount of such fees shall not exceed Rs, 1,00,000 (Rupees one lakh only) per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.

For Independent Women Directors, the sitting fee paid is not less than the sitting fee payable to other Directors.

Commission may be paid within the monetary ceiling limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act.

An Independent Director shall not be entitled to any stock options of the Company.

Copy of the Nomination and Remuneration policy is annexed as part of this Report and is also uploaded on the website of the Company, http:// www.atfoods.com/templates/home_tpl/pdf/ other_info/Nomination%20and%20Remuneration %20Policy.pdf

27. TRAINING OF INDEPENDENT DIRECTORS

Every new Independent Director of the Board attends an orientation. To familiarize the new inductees with the strategy, operations, business and functions of your Company, the Senior Management make presentations to the inductees about the company''s strategy, operations and products.

The Company also encourages and supports its Directors to update themselves with the rapidly changing regulatory environment. Also, at the time of appointment of independent directors, the Company issues a formal letter of appointment describing their roles, functions, duties and responsibilities as a Director. The appointment letters issued to independent directors is uploaded on the website, http://www.atfoods.com/templates/ home_tpl/pdf/other_info/terms_conditions_ appointment_independent_ directors.pdf.

28. AUDITORS

M/s. B S R & Associates LLP, Chartered Accountants, were recommended for appointment as the Statutory Auditors of the Company to hold office from the conclusion of the 27th Annual General Meeting to the conclusion of the 32nd Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the Auditors'' appointment has to be ratified at every Annual General Meeting. Accordingly, the appointment of M/s. B S R & Associates LLP, Chartered Accountants, Firm''s Registration Number:116231W/W-100024 as the statutory auditors of the Company, is placed for ratification by the shareholders. The Company has received a certificate from M/s. B S R & Associates, LLP to the effect that they are not disqualified from continuing to act as Auditors and would be in accordance with the provisions of Section 139 and 141 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014. The Report given by the Auditors, M/s. B S R & Associates LLP., Chartered Accountants on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 and hence, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.

29. SECRETARIAL AUDIT

M/s. Tumuluru & Co, Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the financial year 2015-16. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure to this Director''s Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.

30. SUBSIDIARY COMPANIES

Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the expansion of distribution and display of your products. At the end of FY''16 the number of sales staff on the rolls of the Company were 299.

In FY''16 your Company commenced the work of installation of equipment for the plant near Dhaka, Bangladesh, through its wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd. We are currently in the process of seeking regulatory clearances post which we will be in a position to start work on the supply chain and then commence production. This will enable the Company to build scale in Bangladesh and benefit from the economic growth of a neighboring emerging market.

In FY''15 your Company also started work on leveraging the wholly-owned subsidiary - Sundrop Foods Lanka (Private) Limited established on 27th January, 2015. Limited equipment for the subsidiary has already been shipped from India and in FY''17 we will be working on establishing a local cost local production model which will enable us to benefit from the growth of our neighboring countries and establish our brands where we currently have our presence through export.

During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. The Company has published the audited consolidated financial statements for the financial year 2015-16 and the same forms part of this Annual Report. This Annual Report does not contain the financial statements of our subsidiaries. The statements highlighting the summary of the financial performance of the subsidiaries in the prescribed format is annexed to this Report. The audited financial statements and related information of subsidiaries are available for inspection during business hours at our registered office and will be provided to any shareholder on demand. The separate audited financial statements in respect of each subsidiary companies is also available on the website of your Company. http://www.atfoods.com/ investor-relations/annual-reports.html

31. ANNUAL RETURN

An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management & Administration) Rules, 2014 prepared as on 31st March, 2016 is attached as an Annexure to this Directors'' Report.

32. GENERAL

Your Directors state that no disclosures or reporting are being made in respect of the following items as there were no applicable transactions or events on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under the ESOP scheme referred to in this Report.

4. The Whole-time Director of the Company does not receive any remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and company''s operations in future.

6. No cases reported or filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

7. During the year, your Company has not accepted any public deposits under Chapter V of Companies Act, 2013. In terms of the provisions of Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs. 0.32 Million (as on 30th April, 2016) of unpaid / unclaimed dividends will be transferred to Investor Education and Protection Fund before 30th July, 2016.

33. APPRECIATION

The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.

On Behalf of the Board

Sachin Gopal Lt. Gen. D.B. Singh

President & CEO Director

DIN 00239637

Dr. Pradip Ghosh Chaudhuri

Whole-time Director

DIN 02650577

Dt: 26th April, 2016.


Mar 31, 2015

Dear Members,

The Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended 31st March, 2015.

1. PERFORMANCE OF THE COMPANY

1.1 Results

Your Company''s performance for the year ended 31st March, 2015 is as follows:

(Rs Millions)

2014-15 2013-14

Net Sales 7,562.34 7,622.05

Other Income 36.41 27.05

Total Income 7,598.75 7,649.10

Operating Expenses 6,985.89 6,945.51

PBDIT 612.86 703.59

Depreciation 147.58 107.74

Interest 12.29 20.39

Profit Before Tax (PBT) 452.99 575.46

Taxes 80.20 144.63

Profit After Tax (PAT) 372.79 430.83

Net Sales for the year at Rs 7,562.34 MM were lower than Prior Year of Rs. 7,622.05 MM reflecting primarily the impact of a lower price table in the Edible Oils segment, offset in part by a continued strong growth in the Foods business. The Company was able to mitigate to a significant extent the impact on PAT of

(a) 2 new factories and (b) higher A&P spends through an improvement in effective tax rate as a consequence of Section 80 IC benefits of the Kashipur plant and the R&D centre at Kothur, resulting in a PAT of Rs. 372.79 MM vs PY of Rs. 430.83 MM.

1.2 Key Indicators

(Rs Millions)

2014-15 2013-14

Gross Margin (GM) 1,897.64 1,858.25

GM % 25.1% 24.4%

Advertising & Sales 443.89 314.84

Promotion

A&P % 5.9% 4.1%

Gross Margin % improved by 70 basis points reflecting the continued focus of the Company on improving Gross Margin on a steady and sustained basis. The higher A&P spend enabled the Company to invest increased media resources behind current products of Sundrop Heart & Act II and as well commence support behind Sundrop Peanut Butter.

2. DIVIDEND

Given the continued strong performance of the Company, your Directors are pleased to recommend a Dividend of Rs. 2/- per equity share of the face value of Rs.10/- each for the period ended 31st March, 2015 subject to the approval of the share holders at the Annual General Meeting to be held on 241h July, 2015.

(Rs Millions) 2014-15 2013-14

Profit after Tax 372.79 430.83

Profit brought forward from 1,727.84 1,386.34

Previous year

Surplus available for 2,100.63 1,817.17

Appropriation

Transfer to General Reserve - 32.31

Proposed Dividend for the Financial year at the rate of Rs 2 /- each (previous year Rs 2/-) 48.74 48.74

Tax on Proposed Dividend 9.92 8.28

Forward to the following year 2,041.97 1,727.84

3. RESPONSIBILITY STATEMENT

The Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

4. CORPORATE GOVERNANCE

In terms of the Listing Agreement, a report on Corporate Governance along with Auditors'' Report on its compliance is annexed, forming part of the Annual Report.

Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by Clause 49 of the Listing Agreement.

In line with the requirements of new Companies Act, 2013, your Company has constituted new Board Committees and has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.

12. PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 thereunder in respect of the employees who were in receipt of remuneration aggregating Rs. 60 lakhs or more or were employed for part of the year and were and in receipt of remuneration aggregating Rs. 5 lakhs per month or more during the financial year ending 31st March, 2015 is provided in the Annexure forming part of this Report.

13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

14. PARTICULARS OF CONTRACTS WITH RELATED PARTIES

All contracts or arrangements or transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract or arrangement or transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website : http://www.atfoods.com/ templates/home_tpl/pdf/other_info/ policy_dealing_related_party_transactions.pdf The related party disclosures form part of the financial statements provided in this Annual Report.

15. EMPLOYEE STOCK OPTION PLAN

Details of the shares issued under the Agro Tech Employee Stock Option Plan, as also the disclosures in compliance with the Securities and Exchange Board of India (Share Based Employee Benefit) Regulations, 2014 are set out in the Annexure to this Report.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As a good Corporate Citizen responsible for the Communities where we operate, your Company is involved in a CSR activity under the umbrella of Poshan. The program which is designed to address malnourishment amongst children, works with Government Anganwadi''s and Child Malnourishment Treatment Centers using Peanut Butter which is a source of protein and highly effective to fight malnutrition. In FY''15 we increased the coverage of the program to 8,000 children up from 5,000 children in the prior year. In FY''15 we spent 1.3 % of our Net Profit behind CSR and in line with the guidelines of the new Companies Act this will be steadily increased to achieve the 2% goal specified in the new Companies Act, 2013.

As per the Companies Act, 2013, all Companies having net worth of Rs. 500 crore or more, or turnover of Rs.1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year will be required to

constitute a CSR Committee of the Board of Directors comprising three or more directors, at least one of whom will be an Independent Director.

Aligning with the guidelines, the Company has constituted a CSR Committee comprising Lt. Gen. D B Singh as Chairman, and Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani, Ms. Anna Biehn, Mr. Michael Walter and Mr. Javier Eduardo Alarcon Ruiz as its Members. The Committee is responsible for formulating and monitoring the CSR Policy of the Company. The CSR Policy of the Company, as approved by the Board of Directors is available on the Company''s website : http://www.atfoods.com/templates/home_tpl/pdf/ other_info/ATFL%20CSR%20POLICY.pdf. The program Poshan also received the 2014 South Asia Platinum SABRE Award for Corporate Social Responsibility.

17. RISK MANAGEMENT POLICY

The Company has formulated and adopted risk assessment and minimization framework which has been adopted by the Board at the Board Meeting held on 1st May 2006. The Company has framed a risk management policy and testing in accordance with the laid down policy is being carried out periodically. The Senior Management has been having regular Meetings for reassessing the risk environment and necessary steps are being taken to effectively mitigate the identified risks. A Risk Management Committee also has been constituted with a Committee of the Directors and senior management to address issues which may threaten the existence of the company

18. WHISTLE BLOWER POLICY (VIGIL MECHANISM)

The vigil mechanism under Whistle Blower Policy has been approved by the Board of Directors on 17th October, 2014. This Whistle Blower Policy of the Company provides opportunities to employees to access in good faith, to the Management, concerns (in certain cases to the Audit Committee) in case they observe unethical or improper practices (not necessarily a violation of law) in the Company and to secure those employees from unfair termination and unfair prejudicial employment practices. The policy has also been uploaded on the website of the Company : http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ATFL_WB%20Policy %20final.pdf

19. INFORMATION SYSTEMS

Your Company continued to focus on the use of technology and automation to drive productivity. In FY''15 we continued to see progress in our automation with customers including the use of EDI with Modern Trade Customers and Distributor Automation for the

Traditional Trade.

20. FINANCE AND ACCOUNTS

20.1 Internal Controls

The Company has a robust system of internal controls commensurate with the size and nature of its operations, to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, prevention, and detection of fraud and error, accuracy and completeness of accounting records, timely preparation of reliable financial information and adherence to the Company''s policies, procedures, and statutory obligations.

Your Company has established standard operating procedures for smooth and efficient operations in addition to ensuring internal controls. Your Company has also documented:

- a comprehensive Code of Conduct for the Board Members and employees of your Company

- An Employee Handbook

- Whistle Blower Policy defined to provide channel of communication without fear

- Comprehensive framework for Risk Management, and

- CEO/CFO Certification for Financial Reporting Controls to the Board

The Company has reappointed Deloitte Haskins & Sells as its Internal Auditor to ensure adequacy of internal control systems and make recommendations thereto. Audit reports are circulated to management, which takes prompt action as necessary.

The Audit Committee of the Board meets periodically to review the performance as reported by Auditors. The Internal and External Auditors also attend the meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee also issues directives and/or recommendations for enhancement in scope and coverage of specific areas, wherever felt necessary.

20.2. Cautionary Statement

Statements in this Directors'' Report and Management Discussion and Analysis describing the Company''s objectives, projections, estimates, and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

20.3 Outlook

Having completed significant capexes including 2 Greenfield locations and local capacities for 3 new

Categories (Peanut Butter, Extruded Snacks and Tortilla Chips) the Company is in an extremely strong position to capitalize on the positive momentum in the overall economy and the consequent expected upturn in consumer sentiment. Your Company will now be stepping up its investment in Distribution Expansion to fully leverage the capacities that have been created.

21. DIRECTORS

In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Mr. Javier Eduardo Alarcon Ruiz retires by rotation and being eligible, offers himself for re-appointment. A brief profile of Mr. Javier is given in the notice of the 281h Annual General Meeting.

Ms. Anna Elizabeth Biehn was appointed in the casual vacancy caused by the resignation of Mr. William Lyon Hutton pursuant to the provisions of Section 152(5) of the Companies Act, 2013 and Article 129 of the Articles of Association of the Company.

She holds office up to the date of the ensuing Annual General Meeting. Notice together with the deposit, as required under Section 160 of the Companies Act, 2013 has been received from a Member proposing the appointment of Ms. Anna Biehn as a Director of the Company at the Annual General Meeting.

A brief profile of all the above Directors is given in the notice of the 28th Annual General Meeting.All the Independent Directors of the Company have also given a confirmation to the Company as provided under Section 149(6) of the Companies Act, 2013 that:

a. they are persons of integrity and possess relevant expertise and experience;

b. i. they were neither nor are a promoter of the company or its holding, subsidiary or associate company;

ii. they are not related to promoters or other directors in the company, its holding, subsidiary or associate company;

c. they do not have any pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;

d. none of their relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two percent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

e. neither they nor their relatives -

(i) hold or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed;

(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed, of—

(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or

(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten percent or more of the gross turnover of such firm;

(iii) held together with any relatives two percent or more of the total voting power of the company; or

(iv) is a Chief Executive or director, by whatever name called, of any non-profit organisation that receives twenty-five percent or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company;

f. they possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the Company''s business.

None of the independent Directors will retire at the ensuring Annual General Meeting.

22. MEETINGS OF THE BOARD

The Board of Directors met 4 times during the period April to March in the year 2014-15 on the following dates:

1. 22nd April, 2014

2. 17th July, 2014

3. 17th October, 2014

4. 22nd January, 2015

23. AUDIT COMMITTEE

The Company''s Audit Committee presently comprises of six Directors, all except one are non-executive and Independent Directors. This is in compliance with

Clause 49 of the Listing Agreement. Lt. Gen. D.B. Singh, an Independent Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni, Mr Narendra Ambwani, Mr. Arun Bewoor Mr. Javier Eduardo Alarcon Ruiz and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section 177 of the Companies Act, 2013 and the relevant clauses of the listing Agreement.

24. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The performance of the Company''s Key Managerial Personnel, Whole time Director and Employees is measured on the progress being made on the strategic vision of the Company and Profitability. Progress against the strategic vision of the Company is measured by continued improvement in Gross Margin and share of the Foods business in the total Net Sales of the Company. Profitability is measured using Profit After Tax as a single measure.

The details as required under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being provided as an Annexure to this Report.

25. EVALUATION OF THE BOARD

The Company has formulated a Remuneration Policy in line with the requirements of the Companies Act, 2013. The performance evaluation of independent directors is done by the entire Board of Directors (excluding the director being evaluated). On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent directors.

The Board is evaluated on the basis of the following attributes namely, guiding strategy, nurturing leaders, aligning incentives, managing risks, enhancing the brand and enabling governance.

The remuneration / commission to Non-Executive and Independent Directors shall be fixed as per the provisions contained under Companies Act, 2013. The Non- Executive / Independent Director may receive remuneration by way of fees for attending each meeting of Board or Committee thereof. Provided that the amount of such fees shall not exceed Rs. 1,00,000 (Rupees one lakh only) per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.

For Independent Women Directors, the sitting fee paid is not less than the sitting fee payable to other directors.

Commission may be paid within the monetary ceiling limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company

computed as per the applicable provisions of the Act. An Independent Director shall not be entitled to any stock option of the Company.

Copy of the Nomination and Remuneration policy is annexed as part of this Report and is also uploaded on the website of the Company : http:// www.atfoods.com/templates/home_tpl/pdf/ other_info/Nomination%20and%20Remuneration %20Policy.pdf

26. TRAINING OF INDEPENDENT DIRECTORS

Every new Independent Director of the Board attends an orientation. To familiarize the new inductees with the strategy, operations, business and functions of your Company, the Senior Management make presentations to the inductees about the Company''s strategy, operations and products.

The Company also encourages and supports its Directors to update themselves with the rapidly changing regulatory environment. Also, at the time of appointment of independent directors, the Company issues a formal letter of appointment describing their roles, functions, duties and responsibilities as a Director. The appointment letters issued to independent directors is uploaded on the website : http://www.atfoods.com/templates/ home_tpl/pdf/other_info/terms_conditions_ appointment_independent_ directors.pdf.

27. AUDITORS

M/s. B S R & Associates LLP, Chartered Accountants, were recommended for appointment as the Statutory Auditors of the Company to hold office from the conclusion of the 27th Annual General Meeting to the conclusion of the 32nd Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the Auditors'' appointment has to be ratified at every Annual General Meeting. Accordingly, the appointment of M/s. B S R & Associates LLP, Chartered Accountants, as the statutory auditors of the Company, is placed for ratification by the shareholders. The Company has received a certificate from M/s. B S R & Associates, LLP to the effect that they are not disqualified from continuing to act as Auditors and would be in accordance with the provisions of Section 139 and 141 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014.

28. SECRETARIAL AUDIT

M/s. Tumuluru & Co, Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the financial year 2014-15. Copy of the Secretarial Audit Report in

Form MR-3 is given as an Annexure to this Director''s Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.

29. SUBSIDIARY COMPANIES

Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the expansion of distribution and display of your products. At the end of FY''15 the number of sales staff on the rolls of the company were 178.

In FY''15 your Company completed the civil work for the plant near Dhaka, Bangladesh, through its wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd. The necessary equipment for commencing local production has been shipped and we expect to commence local production in FY''16 and will enable the Company to build scale in Bangladesh and benefit from the economic growth of a neighboring emerging market.

In FY''15 your Company has also set up a wholly-owned subsidiary - Sundrop Foods Lanka (Private) Limited on 27th January, 2015. This establishment of this subsidiary will enable your Company to benefit from the growth of our neighboring countries and establish our brands where we currently have our presence through export.

During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. The Company has published the audited consolidated financial statements for the financial year 2014-15 and the same forms part of this Annual Report. This Annual Report does not contain the financial statements of your subsidiaries. The statements highlighting the summary of the financial performance of the subsidiaries in the prescribed format is annexed to this Report. The audited financial statements and related information of subsidiaries are available for inspection during business hours at our registered office and will be provided to any shareholder on demand. http:// www.atfoods.com/templates/home_tpl/pdf/ other_info/policy_determining_ material_ subsidiary.pdf

30. ANNUAL RETURN

An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management & Administration) Rules, 2014 prepared as on 31st March, 2015 is attached as an Annexure to this Directors'' Report.

31. GENERAL

Your Directors state that no disclosures or reporting are being made in respect of the following items as there were no applicable transactions or events on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under the ESOP scheme referred to in this Report.

4. The Whole-time Director of the Company does not receive any remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

6. No cases reported or filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

32. APPRECIATION

The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.

On Behalf of the Board

Sachin Gopal Lt. Gen. D.B. Singh President & CEO Director DIN 00239637

Dr. Pradip Ghosh Chaudhuri Whole-time Director Dt: 17th April, 2015. DIN 02650577


Mar 31, 2014

Dear Members,

The Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended 31st March, 2014.

1. PERFORMANCE OF THE COMPANY

1.1 Results

Your Company''s performance for the year ended 31st March, 2014 is as follows:

2013-14 2012-13

Net Sales 7,622.05 7,871.60

Other Income 27.05 46.37

Total Income 7,649.10 7,917.97

Operating Expenses 6,945.51 7,246.50

PBDIT 703.59 671.47

Depreciation 107.74 66.74

Interest 20.39 0.30

Profit Before Tax (PBT) 575.46 604.43

Taxes 144.63 188.01

Profit After Tax (PAT) 430.83 416.42

Net Sales for the year at Rs. 7,622.05 MM were lower than Prior Year of Rs. 7,871.60 MM refecting the impact of volatility and competitive activity in the Edible Oils segment offset in part by continued growth in the Snacks business. Lower A&P spends than Prior Year and improvement in effective tax rate enabled a 3.5% increase in Profit After Tax from Rs. 416.42 MM to Rs. 430.83 MM.

1.2 Key Indicators

(Rs. Millions)

2013-14 2012-13

Gross Margin (GM) 1,858.25 1,916.48

GM % 24.4% 24.3%

Advertising & Sales 314.84 451.23 Promotion

A&P % 4.1% 5.7%

Gross Margin % improved marginally by 10 basis points on a lower Net Sales base. A lower A&P spend and a lower effective tax rate due to the benefits on account of the Kashipur facility (Section 80 IC) and the R&D center at Hyderabad, enabled the Company to deliver an improved Profit After Tax from 5.3% of Sales to 5.7% of Sales an improvement of 40 basis points, refecting your Company''s commitment to delivering sustained and Profitable growth.

2. DIVIDEND

Given the continued strong performance of the Company, your Directors are pleased to recommend a Dividend of Rs. 2.00/- per equity share of the face value of Rs. 10/- each for the period ended 31st March, 2014 subject to the approval of the share holders at the Annual General Meeting to be held on 17th July, 2014.

(Rs. Millions)

2013-14 2012-13

Profit After Tax 430.83 416.42

Profit brought forward from 1,386.34 1,058.17 Previous year

Surplus available for 1,817.17 1,474.59

Appropriation

Transfer to General Reserve 32.31 31.23 Proposed Dividend for the Financial year at the rate of Rs. 2 each (previous year: Rs. 2) 48.74 48.74

Tax on Proposed Dividend 8.28 8.28

Forward to the following 1,727.84 1,386.34 year

3. RESPONSIBILITY STATEMENT

The Directors confrm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit or loss of the Company for that period;

iii) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis.

4. CORPORATE GOVERNANCE

In terms of the Listing Agreement, a report on Corporate Governance along with Auditors'' Report on its compliance is annexed, forming part of the Annual Report.

Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certifcation as required by Clause 49 of the Listing Agreement.

15.3 Outlook

The commencement of local production of Peanut Butter, development of a range of Ready to Eat Sweet Popcorn and capacities for Extruded Snacks means that your Company now has a Significantly wider product portfolio to support our growth ambitions. Sundrop Heart, Act II Popcorn and Sundrop Peanut Butter will continue to be our focus areas for marketing investments which will be supported by other existing and new products to gain scale in Manufacturing, Supply Chain & Distribution.

16. DIRECTORS

In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Mr. Michael D Walter retires by rotation and being eligible, offers himself for re- appointment. A brief profle of Mr. Michael Walter is given in the notice of the 27th Annual General Meeting.

Mr. Javier Eduardo Alarcon Ruiz was appointed in the casual vacancy caused by the resignation of Mr. Patrick Douglas Linehan pursuant to the provisions of Section 262 of the Companies Act, 1956 and Article 129 of the Articles of Association of the Company.

He holds offce up to the date of the ensuing Annual General Meeting. Notice together with the deposit, as required under Section 160 of the Companies Act, 2013 has been received from a Member proposing the appointment of Mr. Javier Eduardo Alarcon Ruiz as a Director of the Company at the Annual General Meeting.

The Companies Act, 2013 provides for appointment of Independent Directors. Section 149(10) and (11) of the Act provides that Independent Directors shall hold offce for a term of up to fve consecutive years on the Board of a Company and that no Independent Director shall be eligible for more than two consecutive terms of fve years. The Act also specifes that the provisions of retirement by rotation as defined under Section 152 (6) and (7) shall not apply to such Independent Directors.

SEBI Circular No. CIR/CFD/POLICY CELL/2/2014 dated 17th April, 2014 also specifes that a person who has already served as an Independent Director for fve years or more in a Company as on October 1, 2014 shall be eligible for appointment, on completion of his present term, for one more term of up to fve years only.

On 22nd April, 2014, the Nomination and Remuneration Committee recommended the appointment of Lt. Gen. D B Singh, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani and Mr. Arun Bewoor, all the existing Independent Directors for one more consecutive term of 5 years not liable to retire by rotation.

A brief profle of all the above Directors is given in the notice of the 27th Annual General Meeting.

17. AUDITORS

M/s. B S R & Associates LLP, Chartered Accountants, are recommended for appointment as the Statutory Auditors of the Company to hold offce from the conclusion of the 27th Annual General Meeting to the conclusion of the 32nd Annual General Meeting, in place of M/s. B S R and Co., retiring auditors who did not wish to be reappointed. The Company has received a certifcate from M/s. B S R & Affliates LLP to the effect that their appointment, if made, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014.

18. SUBSIDIARY COMPANIES

Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the expansion of distribution and display of your products. At the end of FY''14 the number of sales staff on the rolls of the company were 115.

In FY''14 your Company also made considerable progress in setting up a plant near Dhaka in Bangladesh through its wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd. The plant is expected to be operational in FY''15 and will enable the Company to build scale in Bangladesh and benefit from the economic growth of a neighboring emerging market.

During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. As per Section 212 of the Companies Act, 1956, we were required to attach the Balance Sheet, Statement of Profit and Loss and other documents of our subsidiaries. The Ministry of Corporate Affairs, Government of India vide its Circular No. 2/2011 dated 8th February, 2011, exempted Companies from complying with Section 212, provided such Companies publish the audited consolidated financial statements in the Annual Report. The Company has published the audited consolidated financial statements for the financial year 2013-14 and the same forms part of this Annual Report. Therefore, this Annual Report does not contain the financial statements of our subsidiaries. The statement pursuant to Section 212 of the Companies Act, 1956, highlighting the summary of the financial performance of the subsidiaries is annexed to this Report. The audited financial statements and related information of subsidiaries are available for inspection during business hours at our registered offce and will be provided to any shareholder on demand.

19. APPRECIATION

The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.

On behalf of the Board

Sachin Gopal Lt. Gen. D.B. Singh

President & CEO Director

Dr. Pradip Ghosh Chaudhuri Whole-time Director

Date: 22nd April, 2014

 
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